Sanderson Farms, Inc. Reports Results for First Quarter of Fiscal 2013
LAUREL, Miss. -- February 21, 2013
Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the first
fiscal quarter ended January 31, 2013.
Net sales for the first quarter of fiscal 2013 were $595.8 million compared
with $517.8 million for the same period a year ago. For the quarter, the
Company had a net loss of $6.9 million, or $0.31per share, compared with a
net loss of $8.0 million, or $0.36 per share, for the first quarter of fiscal
"Our results for the first quarter of fiscal 2013 reflect improving, but still
challenging, conditions for our industry,” said Joe F. Sanderson, Jr.,
chairman and chief executive officer of Sanderson Farms, Inc. “While we
experienced higher poultry market prices than the same period a year ago, our
grain costs were also higher. Retail demand for chicken has remained steady,
but we continue to see weak food service demand. We believe food service
demand will remain under pressure until the national employment environment
improves. While grain prices have retreated from the highs they set last
August, we experienced higher feed costs during the first quarter, and these
higher costs continue to affect our profitability.”
According to Sanderson, market prices for poultry products were higher during
the first quarter of fiscal 2013 compared with the same period of fiscal 2012.
A simple average of the Georgia dock price for whole chickens was
approximately 9.1 percent higher in the Company's first fiscal quarter
compared with the same period in 2012, and currently stands at a record
$1.0050 per pound. Boneless breast meat prices during the quarter were
approximately 5.1 percent higher than the prior-year period. The average
market price for bulk leg quarters decreased approximately 2.0percent for the
quarter compared with the same period last year. Jumbo wing prices were higher
by 24.6 percent compared with last year’s first fiscal quarter, and hit a
record high of $1.92 per pound the week before the Super Bowl. The Company’s
average feed cost per pound of poultry products processed increased 12.1
percent compared with the first quarter of fiscal 2012, and prices paid for
corn and soybean meal, the Company’s primary feed ingredients, increased 16.2
percent and 46.1percent, respectively, compared with the first quarter of
“Market conditions steadily improved during our first fiscal quarter as our
grain costs peaked in November,” Sanderson added. “Market prices and sales
strengthened in January and, as a result, the Company was profitable for the
last month of the quarter.” However, we continue to experience high grain
prices, and expect a challenging cost environment throughout the fiscal year.
Corn supplies are at their tightest level in 15 years, which will likely keep
upward pressureon grain costs at least until the market gets some visibility
into the quantity and quality of the2013 crops.
“Throughout most all of calendar 2012, egg sets and pullet placements remained
below previous year levels, but have trended higher over the past few weeks.
Despite slightly higher chicken production, market prices have remained the
same or moved higher, indicating at least someimprovement in demand. We are
cautiously optimistic regarding macroeconomic conditions,and believe any
further strengthening of the United States economy, coupled with
normalseasonal demand improvement this spring and summer, could support
higher market prices for our poultry products.
“We have been running our plants at approximately 94 percent capacity since
October, which has adversely affected our costs. In order to meet our
customers’ demands and improve our cost structure, we will move our plants to
full production in June. While grain costs remain relatively high,this move
is supported by demand from our customers and our desire to keep our costs
competitive,” concluded Sanderson.
Sanderson Farms will hold a conference call to discuss this press release
today, February21,2013, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors
will have the opportunity tolisten to a live Internet broadcast of the
conference call through the Company's Web site at www.sandersonfarms.com or
through www.earnings.com. To listen to the live call, please go to the Web
site at least 15 minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live broadcast,
an Internet replay will be available shortly after thecall and continue
through March 4, 2013. Those without Internet access may participate in the
call by dialing 888-724-9496; confirmation code 7405481.
Sanderson Farms, Inc. is engaged in the production, processing, marketing and
distributionof fresh and frozen chicken and further processed and partially
cooked chicken products. Its shares trade on the NASDAQ Global Select Market
under the symbol SAFM.
This press release includes forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act
of 1995, as amended. Forward-looking statements are based on a number of
assumptions about future events and are subject to various risks,
uncertainties and other factors that may cause actual results to differ
materially fromthe views, beliefs, projections and estimates expressed in
such statements. Theserisks, uncertainties and other factors include, but are
not limited to those discussed under“Risk Factors” inthe Company’s Annual
Report on Form 10-K for the year ended October 31,2012, and the following:
(1) Changes in the market price for the Company’s finished products and feed
grains, both of whichmay fluctuate substantially and exhibit cyclical
characteristics typically associated with commodity markets.
(2) Changes in economic and business conditions, monetary and fiscal policies
or the amount of growth, stagnation or recession in the global or U.S.
economies, either of which may affect the value of inventories, the
collectability of accounts receivable or the financial integrity of customers,
and theability of the end user or consumer to afford protein.
(3) Changes in the political or economic climate, trade policies, laws and
regulations or the domesticpoultry industry of countries to which the Company
or other companies in the poultry industry ship product, and other changes
that might limit the Company’s or the industry’s access to foreign markets.
(4) Changes in laws, regulations, and other activities in government agencies
and similar organizations applicable to the Company and the poultry industry
and changes in laws, regulations and other activities in government agencies
and similar organizations related to food safety.
(5) Various inventory risks due to changes in market conditions including, but
not limited to, the risk that market values of live and processed poultry
inventories might be lower than the cost of such inventories, requiring a
downward adjustment to record the value of such inventories at the lower of
cost or market as required by generally accepted accounting principles.
(6) Changes in and effects of competition, which is significant in all markets
in which the Company competes, and the effectiveness of marketing and
advertising programs. The Company competes with regional and national firms,
some of which have greater financial and marketing resources thanthe Company.
(7) Changes in accounting policies and practices adopted voluntarily by the
Company or required tobe adopted by accounting principles generally accepted
in the United States.
(8) Disease outbreaks affecting the production performance and/or
marketability of the Company’s poultry products, or the contamination of its
(9) Changes in the availability and cost of labor and growers.
(10) The loss of any of the Company’s major customers.
(11) Inclement weather that could hurt Company flocks or otherwise adversely
affect its operations, or changes in global weather patterns that could impact
the supply of feed grains.
(12) Failure to respond to changing consumer preferences.
(13) Failure to successfully and efficiently start up and run a new plant or
integrate any business theCompany might acquire.
Readers are cautioned not to place undue reliance on forward-looking
statements made byoron behalf of Sanderson Farms. Each such statement speaks
only as of the day it was made. The Company undertakes no obligation to update
or to revise any forward-looking statements. Thefactors described above
cannot be controlled by the Company. When used in this press release or in the
related conference call,thewords “believes”, “estimates”, “plans”,
“expects”, “should”, “outlook”, and “anticipates” and similarexpressions as
they relate to the Company or its management are intended to
identifyforward-looking statements. Examples of forward-looking statements
include statements ofthe Company’s belief about futureearnings, grain
prices, supply and demand factors, and other industry conditions.
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
Net sales $ 595,760 $ 517,826
Costs and expenses:
Cost of sales 584,867 509,004
Selling, general and administrative 20,565 17,903
Operating loss (9,672 ) (9,081 )
Other income (expense):
Interest income 3 2
Interest expense (1,805 ) (2,962 )
Other 171 (564 )
(1,631 ) (3,524 )
Loss before income taxes (11,303 ) (12,605 )
Income tax benefit (4,360 ) (4,616 )
Net loss $ (6,943 ) $ (7,989 )
Basic loss per share $ (0.31 ) $ (0.36 )
Diluted loss per share $ (0.31 ) $ (0.36 )
Dividends per share $ 0.17 $ 0.17
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
January 31, October 31,
Cash and cash equivalents $ 23,816 $ 27,802
Accounts receivable, net 100,948 98,022
Inventories 235,122 235,912
Refundable income taxes 7,315 4,467
Deferred income taxes 2,409 3,945
Prepaid expenses 28,637 27,639
Total current assets 398,247 397,787
Property, plant and equipment 992,691 985,198
Less accumulated depreciation (501,063 ) (489,885 )
Other assets 3,321 3,353
Total assets $ 893,196 $ 896,453
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses $ 128,056 $ 124,837
Current maturities of long-term debt 10,757 10,757
Total current liabilities 138,813 135,594
Long-term debt, less current maturities 150,027 150,212
Claims payable 9,200 4,000
Deferred income taxes 55,481 56,572
Common stock 23,009 22,969
Paid-in capital 135,688 135,283
Retained earnings 380,978 391,823
Total stockholders’ equity 539,675 550,075
Total liabilities and stockholder’s equity $ 893,196 $ 896,453
Sanderson Farms, Inc.
Mike Cockrell, 601-649-4030
Treasurer & Chief Financial Officer
Press spacebar to pause and continue. Press esc to stop.